THIS BLOG RATES THE S&P 500 BUY/SELL/OR HOLD EACH DAY WITH 2-GOALS FOR LONG TERM INVESTMENTS: (1) PRESERVE CAPITAL (2) BEAT THE S&P 500.
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Thursday, March 13, 2014

Initial Claims…Retails sales…China Slows…Time to Sell

INITIAL CLAIMS (Briefing.com)The initial claims level fell to 315,000 for the week
ending March 8 from an upwardly revised 324,000 (from 323,000) for the week
ending March 1. The Briefing.com consensus expected the initial claims level to
increase to 329,000…The DOL reported that there were no special factors that
drove the initial claims level to its lowest point since November 2013.It is
likely that the drop in claims was the result of normal volatility. “
Story and charts at…http://www.briefing.com/Investor/Calendars/Economic/Releases/claims.htm

RETAIL SALES (Reuters)

“U.S. retail sales rebounded in February and new
filings for jobless benefits hit a fresh three-month low last week, suggesting
the economy was regaining strength after an
abrupt slowdown caused by severe weather. The data on Thursday reinforced
expectations of a pick-up in economic activity and should encourage the Federal
Reserve to continue scaling back its massive monetary stimulus.”Story at…

“China's manufacturing growth fell to an eight-month low
in February…reflecting further weakening in the world's second-largest economy
but also the effect of a major holiday. The purchasing managers' index (PMI)
tumbled to 50.2, the National Bureau of Statistics reported on its website, in
the third straight drop from 50.5 in January, 51.0 in December and 51.4 in
November. A figure over 50 indicates expansion while one below shows
contraction.”Story at…http://www.nst.com.my/business/latest/china-manufacturing-growth-slows-to-8-month-low-govt-data-shows-1.511153

The sharp VIX rise today and the Bond market indicate the
markets are showing worry.All this the
day after I wondered why there was no fear.Who knew? Both the short-term
indicator (based on market internals) and the longer term NTSM indicators are
now negative on the market.The NTSM
system says SELL.

An up-day is suggested for tomorrow (Friday) because
today was a statistically significant day based on the size of the price-volume
action today.These days are followed by
an up-day about 60% of the time.Now, I’m
not so sure.There’s some fear in the
air and traders may not want to hold over the weekend if they are worried.

MARKET INTERNALS (NYSE DATA)

The 10-day moving average of stocks advancing fell to 49%
at the close.(A number below 50% for
the 10-day average is generally bad news for the market.) New-highs outpaced new-lows Thursday.The spread (new-highs minus new-lows was +27.
(It was +15 Wednesday). The 10-day
moving average of change in the spread was minus-9. In other words, over the
last 10-days, on average, the spread has decreased by 9 each day. The 10-dMA of
up-volume continues to fall.The
internals are now negative on the market.

Market Internals are a decent trend-following analysis of
current market action, but should not be used alone for short term trading.
They are usually right, but they are often late.They are most useful when they diverge from
the Index.In 2013, using these
internals alone would have made a 16% return vs. 30% for the S&P 500 (in on
Positive out on Negative – no shorting).Of course, few trend-following systems will do well in an extreme
low-volatility, straight-up year like 2013.

NTSM

The NTSM system switched to SELL today, Thursday based on
2-indicators: Sentiment at 80%-bulls and VIX that has been rising recently and
was up a lot today.Volume and Price indicators
are neutral.

I will cut my stock position back to 30% tomorrow.At this point it is hard to know whether this
is just another false alarm move back to the 50-dMA at 1829 or the lower trend
line (now around 1780).The 200-dMA is
1736, about 6% below today’s close and that is a support point. Of course anything is possible based on news
related to China’s economics or geo-politics related to Ukraine.Sanctions against Russia will be harmful to
the stock markets, as I noted earlier.

MY INVESTED POSITION

I am about 50% invested in stocks because I upped my
stock holdings by 10% on 12 Feb and another 10% on 28 Feb.I’ll sell back to 30%-stocks tomorrow.This is a conservative stock allocation commensurate
with the NTSM Sell signal.Leaving 30%
invested hedges the bet in case NTSM is wrong – no system is perfect.

Followers

About Me

I am an engineer with a lifelong interest in "playing with numbers" so what could be more fun than trying to develop a system that beats the stock market? Well, lots of things, but I decided to do this anyway.
While I am not a finance-professional, or professional investor, I have developed some skills.
I competed in two CNBC Million Dollar Portfolio contests finishing in the top 4% in 2008 (34,320th of 800,000) and the top 0.1% (448th of 500,000) in 2009. More importantly, I managed to sell out of my retirement accounts at or near the top in 2000 and 2007 and bought close enough to the bottom that I didn’t lose too much sleep. (Even Bill Gates lost SOME sleep.)
I hope that my thoughts will help you achieve your investing goals. Please remember that my ideas are free and there may be times when my ideas are worth less than what you paid.